The Republicans’ Financial Catastrophe

There’s been a lot written in the last few days about how in the Republican primary money supposedly isn’t as important as it was in the past. Poppycock. The reason it’s supposedly not important is that other than Romney and possibly Perry, none of the Republicans have any. This is the latest bit of evidence that the Republican presidential candidates are experiencing a financial catastrophe:

What is that “massive debt?”

Creditors say Gingrich has begun paying back nearly $1.2 million in bills he owed at the end of September, and his spokesman says most will be taken care of by the end of the year. Other debts — including $42,000 owed to Gingrich himself for the campaign’s use of a mailing list — have already been paid ahead of other vendors, according to aides and disclosure records.

Most folks in the press read that and focused in on deliciousness of Newt not paying off his campaign debts except those owed to himself. Sure, it’s hard not to whack Newt when he’s making himself a human pinata. But what’s truly astonishing about this is that the current front-runner for the Republican nomination for president is running a campaign with so little money that they can’t pay off a million dollar debt. That’s not a “massive debt.” It is about a third the amount Gingrich raised from when he entered the race in May through the end September. But it’s less money than Tom Tancredo’s presidential campaign raised in a three-month period in 2007. Twice. And it’s equal to what the campaigns of Barack Obama and Hillary Clinton were spending, on average, every two days for the last three months of 2007.

Gingrich’s problem isn’t elaborate spending (although he made extravagant choices for someone spending such paltry amounts). His problem is fundraising. In the third quarter, he raised $807,000. That was roughly 5 times less than raised by both Michele Bachmann and Jon Huntsman. It’s ten times less than Ron Paul raised. And it’s less than a twentieth of what Rick Perry raised. Most laughably, it wasn’t even double the $500,000 raised by Thaddeus McCotter.

If you forgot McCotter ran for president, or don’t even know who he is, that’s the point. But when you compare what’s happening now to 2007, you see the scope of the Republicans’ catastrophe.

Through the third quarter of 2011, Gingrich had raised a total of about $3 million. In 2007, in the third quarter alone, Republicans John McCain and Fred Thompson both spent about $5 million, Rudy Giuliani spent $13 million and Romney spent $21.3 million. Only Romney was close to the spending of Obama ($21.5 million) and Hillary Clinton ($22.6 million).

Because he had raised so little money, Gingrich had little money to spend. In the third quarter he spent only $776,000, and in the early part of his candidacy, when he piled up what the Post characterizes as “massive debt,” he spent only $1.7 million. Thus, Gingrich’s debt is about equal to what the Obama and Clinton campaigns spent, on average, every four days from July through September in 2007, and every two days for the last three months of that year.

According to Gingrich’s campaign, his campaign brought in an additional $4 million from October through mid-November. But that’s still nothing. In the fourth quarter of 2007, McCain–who didn’t contest Iowa–spent over twice that amount, Fred Thompson spent over three times that amount, Giuliani and Paul each spent over four times that amount and Romney spent over 8 times that amount.

Gingrich’s receipts for October and the first half of November are one tenth what Obama and Clinton spent in the fourth quarter of 2007, and even after that Obama had almost $20 million left over and Clinton had almost $40 million cash on hand.

But go beyond Newt and you see the entire field faces dire money problems. Through October 1 of 2007 Giuliani had raised $47 million. Romney had raised $44 million. McCain, who had been thought dead at the end of October, had raised $32 million.  This time, Romney has only managed to match McCain’s $32 million. Rick Perry, at $17 million, is the only Republican this cycle who’s raised more than Fred Thompson’s $12 million through October 1, 2007.

The Republicans’ financial catastrophe is why it’s only now that any of them are starting any serious TV advertising. And their spending is, not surprisingly, a small faction of what’s been spent in the past.

At this point in 2007, Iowa residents had been subjected to 26,037 television commercials from presidential candidates and political groups in a barrage of advertising that was unparalleled.

So far this year? Iowans have been hit with just 8,697 television ads.


The money spent in both years also shows a wide disparity. Campaigns and political groups had spent $21.6 million in Iowa by this point in 2007, and another $13 million in New Hampshire. This year they have spent just $2.4 million in Iowa and $1.3 million in New Hampshire.

But even when compared to 2003, the last year only one party had a contested primary, the figures are smaller (and they don’t take inflation into account). In Iowa, $2.7 million had been spent for a total of 13,957 spots. In New Hampshire the numbers were $1,597,760 spent on 4,588 spots.

The comparison with 2003 is even worse when you consider two additional facts. First, the maximum contribution to a federal candidate in 2003 was $2,000 for a primary. Today, it is $2,500. More stark is the difference in the schedules. In 2004, the Iowa Caucuses were January 19th. This cycle, they’re January 3rd. In 2003, there was almost three weeks between New Year’s Day and the vote, so campaigning before Christmas and New Year’s wasn’t as crucial. This year, campaigning is practically done around December 23rd. With six weeks remaining in 2003 the Democrats had already spent more than the Republicans have spent this year, and they have only three more weeks until votes are cast in Iowa.

The Republican spending is pathetic even when you compare it to lower-level races. In another article, the Post reports on what it calls Gingrich’s “relatively big ad buy” in Iowa. Relative to his opponents, it may be big. But relative to any reasonably-funded campaign, his $250,000 ad buy is not big at all. For instance, the Karl Rove-linked Crossroads GPS just placed a $150,000 ad buy against Des Moines Democratic Congressman Leonard Boswell, bringing their total spending against Boswell–a Congressman running in only one quarter of Iowa–to $300,000. And that’s for an election eleven months from now, not three weeks away.

The beginning of the air war in Iowa may change the dynamic of the race. But with the candidates spending modest amounts with limited exposure and hardly visiting the early states, it’s unclear the in-state activities in Iowa will move the poll numbers much. Gingrich’s astonishingly bad fundraising may offer an opportunity for a reasonably-funded campaign–and only Romney, Perry and maybe Paul fit this description–to close the gap and prevail on January 3rd. But even if they do, the Republicans’ financial catastrophe has allowed a candidate with no meaningful campaign to shoot to the lead, and has exposed the weakness of the Republicans’ entire field.

It’s too soon to say that money isn’t important to the Republican presidential primary campaign. We’ll have to wait to make that judgment until after some of the candidates spend the money to run a real campaign.

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4 Responses to The Republicans’ Financial Catastrophe

  1. skohayes says:

    This is fascinating. I thought Gingrich’s “surge” would bring in more money (and it may have), but when you look at the money raised by Romney, there’s no way he can compete with that. It gives Romney the ability to travel all over the US raising money, and still be able to run ads, and do campaign events.

    • Dana Houle says:

      Except he is competing with it. It’s hard to say that Gingrich is doing well because Romney has held his fire up to now, or that Romney’s money isn’t enough to keep a horribly weak primary candidate from losing his lead and possibly his chance at the nomination, even against someone with no money of his own.

  2. Elisabeth says:

    How will this work when we get to FL, MI, OH, PA etc state primaries? I would think the eventual nominee would like to do well in the GE swing states.

    • Dana Houle says:

      I haven’t seen anyone address that. But you’re right, the money problems would be more visible even wrt New Hampshire, where to do saturation advertising you must buy a lot of (very expensive) Boston television. And certainly Florida is very expensive.

      So, at some point, the media is going to catch on that the Republicans don’t have any more to pay for their own advertising, which is why to date about the only messaging that’s moving voters are the (free to the candidates) debates and the news coverage of the race.

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